Modine Manufacturing Company MOD is accelerating its shift into a pure-play climate solutions business focused on high-growth, high-margin thermal management technologies. In the third quarter of fiscal 2026, its Climate Solutions segment sales rose 51% year over year to $544.6 million on robust data center demand and contributions from recent HVAC acquisitions. It expects fiscal 2026 revenues to approach $2 billion, up from $1.6 billion in fiscal 2025, supported by strong growth in data centers and recent HVAC acquisitions. The segment remains highly profitable, delivering a 19.6% adjusted EBITDA margin, with further growth anticipated.
To sharpen its focus on the Climate Solutions segment and strengthen its ability to invest in innovation and expand in key markets like data center cooling, commercial HVAC and refrigeration, Modine agreed to spin off its Performance Technologies business and merge it with Gentherm Incorporated THRM through a tax-free Reverse Morris Trust transaction in January 2026.
Valued at about $1 billion, the deal includes a $210 million cash distribution to Modine before the spin-off, which will enhance the financial flexibility for future investments. After completion, shareholders will retain full ownership of Modine’s Climate Solutions business and a 40% stake in the combined Gentherm and Modine Performance Technologies platform, creating exposure to two focused, higher-growth platforms with strong long-term value potential. MOD carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Restructuring Moves Adopted by MOD’s Competitors
Dana Incorporated DAN sold its Off-Highway business in June 2025 for $2.7 billion, equivalent to about 7x its projected 2025 adjusted EBITDA. Following the divestiture, Dana used the proceeds to significantly reduce debt and strengthen its financial position, cutting debt by approximately $1.9 billion and maintaining liquidity of around $1.8 billion. This improved balance sheet and lower leverage are expected to enhance Dana’s flexibility to pursue future growth opportunities.
BorgWarner Inc. BWA exited its Charging business in the second quarter of 2025. BorgWarner also consolidated its North American Battery Systems operations to better align with market conditions. This restructuring is projected to deliver annual cost savings of about $20 million by 2026. These actions support BorgWarner’s goal of building a more efficient and competitive business.
MOD’s Price Performance, Valuation & Estimates
MOD has outperformed the Zacks Automotive-Original Equipment industry. Modine’s shares have gained 54.8% against the industry’s decline of 5.7% in the last six months.
Image Source: Zacks Investment Research
From a valuation perspective, MOD appears overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 3.28, higher than the industry’s 2.13.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MOD’s fiscal 2026 and 2027 EPS has moved up a penny and 4 cents, respectively, in the past 60 days.
Image Source: Zacks Investment Research
Zacks' Research Chief Picks Stock Most Likely to "At Least Double"
Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.
See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
BorgWarner Inc. (BWA): Free Stock Analysis Report
Dana Incorporated (DAN): Free Stock Analysis Report
Gentherm Inc (THRM): Free Stock Analysis Report
Modine Manufacturing Company (MOD): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).